A major political crisis is underway in Sri Lanka following President Maithripala Sirisena’s sacking of Prime Minister Ranil Wickremesinghe, replacing him former President Mahinda Rajapaksa and finally the dissolution of parliament. There are now multiple petitions now pending before the country’s Supreme Court challenging the constitutional validity of Sirisena’s actions.
Meanwhile, if general elections were allowed, Rajapaksa’s chances of returning to power look good given that the Sri Lanka Podujana Peramuna party – which he formally joined just a few days ago – came out on top in local elections in February. 
During Rajapaksa’s tenure as President from 2005 to 2015, the Chinese had begun to gradually involve themselves in Sri Lankan politics. Besides supplying arms to the Sri Lankan armed forces in the civil war against the LTTE, the Chinese were involved in financial transactions directly to Rajapaksa’s family and cronies in exchange for swinging major infrastructure deals China’s way. Therefore, when Rajapaksa lost power, it was widely perceived as China also having lost their man in power.
Nevertheless, the degree of Chinese involvement in Sri Lanka was such that despite concerns raised during the elections about the Colombo Port City project helmed by the Chinese – the largest foreign investment in the country – it continued on track even under Sirisena.
Therefore, the current shake-up in the Sri Lankan system is unlikely to ruffle the Chinese too much. If anything, it possibly takes attention away from such pressure points for as China’s 99-year lease on Sri Lanka’s Hambantota port. In the short term, there can be no doubt that the Chinese will be able to recover some lost ground as Sri Lanka’s politicians slug it out. Across the board, no matter what their personal views on China, Sri Lanka’s politicians have learnt to do business with Beijing. Sirisena has called China’s support ‘indispensable’ for his country’s development, while as Prime Miniser Wickremesinghe supported the various projects under China’s Belt and Road Initiative in Sri Lanka. It is therefore, no surprise that the Chinese ambassador was quick to meet with both Wickremesinghe and Rajapaksa in the wake of the crisis.
But it is also a sign of the times and of China’s increasing presence that allegations have quickly surfaced of China funding certain parliamentarians amidst the ongoing political crisis. The Chinese embassy in Colombo called the allegations ‘groundless and irresponsible’ and reiterated that China was ‘a friendly neighbor’ of Sri Lanka’s. It also stated, ‘We believe that the Sri Lankan government, parties and people have the wits and ways needed to deal with the current situation’.
The interesting part is not the patronizing note about the Sri Lankans being able to manage their own affairs but the declaration that China was ‘a friendly neighbor’. China is geographically nowhere near Sri Lanka to be calling itself a ‘neighbor’ but clearly Beijing sees South Asia as part of China’s near neighbourhood and an area of interest. Further, to say that it was a ‘friendly’ neighbour is to imply that Sri Lanka has unfriendly neighbours, which, of course, can only be a reference to India. In this, Beijing might be reflecting an important point of view on the island nation but also adds fuel to the fire.
In many ways, the Chinese Embassy statement also reflects the reality of an increasingly close economic relationship between Sri Lanka and China. China accounted for 30% of FDI into Sri Lanka from 2012 to 2016 and is also the latter’s biggest source of imports. China is also trying to increase its own imports from Sri Lanka. In this context, the China National Agriculture Wholesale Market Association recent announcement that there is ‘a huge export opportunity for the Sri Lankan agriculture and fresh produce sector’ is significant.
To take another example, India remains the top source of tourists to Sri Lanka but the growth of Chinese arrivals has been faster and could eventually change the situation. Notably, Sri Lanka’s first private airline, with funding from American and Chinese investors, is expected to start operations in February 2019 with five daily direct flights to destinations in China. This can be expected to increase the flow of Chinese tourists to Sri Lanka.
While Sino-Sri Lankan economic engagement in these cases do not come at the expense of India, its growth will eventually change the incentive structure for Colombo in its dealings with New Delhi. The pace of change will depend also on who holds the reins of power in Colombo.
This article originally appeared as Jabin T. Jacob, ‘China as Sri Lanka’s ‘friendly neighbor’ is bad news for India’, Moneycontrol.com, 14 November 2018.